The House Passed Financial Reform; Now What?

The House of Representatives passed a sweeping overhaul of America’s financial sector and the regulatory structure that oversees it Wednesday evening, the penultimate step in a two-year effort sparked by the 2008 crisis. The 237-192 vote split largely along party lines, with most Democrats supporting the measure and most Republicans opposing it.

The version of the legislation approved was a compromise between House and Senate language, finagled by Financial Services Committee Chairman Barney Frank and Banking Committee Chairman Chris Dodd in the 24 hours before the vote to fit the wishes of recalcitrant Republicans in the Senate.

When the Senate takes up the bill after the July recess, Democrats will need 60 votes to clear procedural hurdles before final passage. Of the 99 currently sitting Senators, 38 are already firms nays — 37 Republicans and one Democrat, Russ Feingold — and 56 are solid ayes, all Democrats. Sitting on the fence are Democrat Maria Cantwell, who voted against the original Senate bill, and Republicans Scott Brown, Chuck Grassley, Susan Collins and Olympia Snowe, all of whom voted for the Senate version.

Despite the fact that an $18 billion assessment on the financial sector was dropped from the bill in the 11th hour at Brown’s behest, the Massachusetts lawmaker said Wednesday he was still unsure of how he would vote. Collins, who had also raised protests over the bank tax, said she was now more “inclined to support” the bill, but offered no concrete assurances. Snowe has not commented on her intentions since the measure’s removal, and Senators Cantwell and Brown said they are continuing to study the legislation.

If Majority Leader Harry Reid is unable to secure votes from four of the five holdouts, he will have to wait for the replacement of the late Robert C. Byrd to be seated, or go back to the drawing board altogether. Now that the House has adopted a merged bill, the legislation cannot be altered without sending it back to the House for re-approval.

Reid, with no public assurances from the holdouts and no easy way to tweak the legislation if they need further convincing, hopes to bring up a final vote in the Senate the week of July 12.